Information Management and Business Review
Vol. 5, No. 2, pp. 99-107, Feb 2013 (ISSN 2220-3796)
The Convergence of Manufacturing and Service Technologies: A Patent Analysis
Approach
Youngjung Geum1, Moon-Soo Kim2, Yongtae Park1, *Sungjoo Lee3
1Seoul National University, Republic of Korea
2Hankuk University of Foreign Studies (HUFS), Republic of Korea
3Ajou University, Republic of Korea
*sungjoo@ajou.ac.kr
Abstract: Active technological convergence of manufacturing industries and service industries has been
emerged as a core and essential phenomenon for recent business environment. Technology convergence
has already been the basic force behind the both product innovation and service innovation, changing the
ways in which firms interact with their customers. Despite the gravity, there has been limited approach to
investigate the technological convergence of manufacturing technologies and service technologies from
the empirical perspective. In response, this paper aims to investigate technological convergence between
manufacturing technology and service technology using patent analysis. For this purpose, we define the
service technology and manufacturing technology. Following on this, we analyze the USPC classification of
those technologies to analyze the technological convergence. To investigate the dynamic change of
convergence, 10-year-dyanamics are observed. As case studies, three industries which show high level of
technological convergence of manufacturing and service - banking, healthcare, and education industries are selected and analyzed in detail.
Keywords: Technological convergence, manufacturing, service, technology, patent analysis
1. Introduction
Traditionally, technology has been a central axis for the manufacturing industry. Quite naturally,
development and application of a certain technology used to be the scope of product innovation. However,
it is recently argued that the application of technology is not simply resorted to the manufacturing
industry, but extended to the service industry (Quinn et al., 1988; Quinn and Paquett, 1990; Kang, 2006).
Rather, technology triggers the active convergence of products and services, which has been considered
as a core and essential phenomenon for many firms to gain profit (Bore´s et al., 2003). Technological
convergence is behind this interesting phenomenon: manufacturing-service convergence. It has already
been the basic force behind the both product and service innovation, changing the ways in which firms
interact with their customers (Bitner, 2001; Auernhammer & Stabe, 2002; Geum et al., 2011). Therefore,
technology convergence occupies a substantial part of product-service convergence, enabling the active
associations of two different industries. This phenomenon can be proven by many practical cases of
current business environment: companies such as IBM, General Electric, and Xerox have been gaining
profits from technology-originated services since the middle of 1990s, exemplifying a shift from the
manufacturing-oriented industry to convergence industries (Martinez et al., 2010; Geum et al., 2011).
Despite the importance of technological convergence in manufacturing industries and service industries,
there has been a limited approach to investigate this phenomenon from the empirical perspective.
The lack of data on investigating the technological convergence being a major impediment, previous
research has been resorted to the theoretical investigation of technological convergence, focusing on the
discussion of current phenomena of technological convergence (Blackman, 1998; Bores et al., 2003;
Stehrer & Worz, 2003; Hacklin, 2008; Hacklin et al., 2009; Lee et al., 2010). Even though some empirical
research has tried to investigate the technological convergence (Curran and Leker, 2009; Curran and
Leker, 2011), these research have been limited to the manufacturing industries only, or industries with
high technology such as information and communication technology (ICT) industry. Research on
technological convergence between manufacturing technology and service technology still remains as
void in the literature. However, given the substantial dynamics of manufacturing-service convergence, it
is highly required to investigate the technological convergence between manufacturing and service.
Addressing the limitation of previous research, our study aims to investigate the technological
convergence between manufacturing technology and service technology using patent analysis. For this
99
purpose, we first define the service technology and corresponding manufacturing technology. As an
analysis method, we employ patent classification analysis which has been regarded as an imperative
means to identify technological convergence and proximity (Tijssen, 1992; Karvonen & Kässi, 2011; Geum
et al, 2012). The remainder of this paper is organized as follows. The theoretical and methodological
background is discussed in the Literature Review. Next, the research framework of this paper is
suggested with overall process and detailed procedure. Next, the result of analysis is provided in the
experiment section. Finally, contributions and limitations of this research are discussed in the conclusion.
2. Literature Review
Technological convergence: From the work of Rosenberg in 1963 (Rosenberg, 1963), technological
convergence has been widely discussed in many literatures (Lee et al., 2010). Technological convergence
is defined as the process by which different industries come to share similar technological bases
(Rosenberg, 1963). It is prompted by the rise of some generic technologies that can be applied to a wealth
of different products (Gambardella & Torrisi, 1998). Many different areas have been involved in the
technological convergence, such as information and communications technology (ICT), robotics, medical
industry, education industry, and banking industry. Especially, digital convergence, driven by ICT
industry, involves analog–digital integration, wired–wireless integration, voice–data integration, and
service–device integration, which result in convergence of networks and telecom-broadcasting
convergence. Previous research on technological convergence is mainly concerned with the theoretical
and practical investigation of technological convergence, including an ex ante definition of convergence or
in-depth explanation of current phenomena of technological convergence (Stehrer & Worz, 2003; Hacklin,
2008; Hacklin et al., 2009; Lee et al., 2010). Extended from the theoretical investigation, some research
have devoted to the managerial and policy implications which are incurred by the technological
convergence (Blackman, 1998; Bores et al., 2003).
Patent analysis: Patents have long been used as a proxy measure for technological power (Grilliches,
1990). The basic method for patent analysis was the bibliometric analysis which simply counts the
number of patents (Wartburg et al., 2005). Extended from the bibliometric analysis, some advanced
techniques have been employed such as citation analysis and classification analysis. Patent citation
analysis is based on the assumption that more frequently cited patents have higher technological power
(Narin et al., 1987). Another important strength of citation analysis is to identify similarities between
technologies (Lee et al., 2009). Since we can assume that cited patents are closely related to the original
patents, patent citation can be considered as an important measure for technological convergence. Patent
classification analysis is another important method to measure the similarity of two patents. Patent class
refers to the way the examiners of a patent office arrange patent documents according to the technical
features (Geum et al., 2012). Since the same document may be classified in several classes, the coclassification can be used to identify the relationships between technologies. To investigate the
technological convergence, there have been a few studies to employ patent document. Since patent
documents are an ample source for technical and commercial knowledge (Ernst, 2003), it has been
actively used as a proxy for measuring technological convergence. Some research considers patents as a
useful source to analyze the technology-driven convergence, demonstrating convergence between the
pharmaceutical, the chemical, the nutrition and the cosmetics industries (Curran and Leker, 2009; Curran
and Leker, 2011).
3. Research Framework
Figure 1: Overall process of this paper
100
Define the target technological field: First, as a preliminary work, we define the target technological
field to be investigated. Technological fields that show a high level of technological convergence between
manufacturing technology and service technology are selected as objects of this study.
Define the service technology: The next step is to define the service technology. Since the service
technology has rarely been discussed and has not been defined systematically (Lee et al., 2011), defining
the service technology is an important but hard task. In this study, we employ business method (BM)
patents, categorized as a 705 class in United States Patent and Trademark Office (USPTO) database, as a
service technology. A BM patent is defined as a method of administering, managing, or operating an
enterprise or organization (Koda, 2000; Han et al., 2011). These BM patents describe the real world
business models of manufacturing and the service field in electronic environments, thus have been
utilized as sources of information that can explain the business process or method thoroughly (Han et al.,
2011). Even if a BM patent deals with the process and methods of general businesses, its main application
area has been the service industry. For this reason, literature has discussed the characteristics of BM
patent as related to the service. The 705 class which deals with BM patents is defined as “data processing:
financial, business practice, management, or cost/price determination.”
Define the manufacturing technology: After defining the service technology, we define the
corresponding manufacturing technology associated with the service technology. Since the scope of
manufacturing technology is too broad and thus extremely hard to be organized, we redefine the
manufacturing technology here as “manufacturing technology associated with the service technology.” For
this reason, we collect the associated manufacturing technology using backward citation of identified
service technology. In other words, patents cited in the service technology (which is collected in the
previous step) are considered as candidates for manufacturing technology. Among those patents, patents
except 705 class are finally considered as manufacturing technology.
Examine the technological convergence using patent classification: To investigate the technological
convergence of manufacturing technology and service technology, we employ classification analysis.
Since the USPC system is one of the most representative classification systems for technologies (Lee et al.,
2011), we use USPC classification system. The USPCs are collected and analyzed for manufacturing
technologies which are cited by service technologies. Since those technologies can be considered as
converging technologies themselves, analysis of USPCs of those manufacturing technologies can provide a
significant implication for technological convergence.
Analyze the dynamic changes of convergence: To investigate the dynamics of technological
convergence, we conduct the dynamic analysis by changing the target period. For each period, service
patents and associated manufacturing patents are analyzed.
3. Case Study
Data: To illustrate the working of our approach, we conducted a case study of technological convergence.
We used the USPTO database (http://uspto.gov/) to identify the convergence pattern between
manufacturing technology and service technology. To compare the convergence pattern between different
industries, three industries where technological convergence actively happens are selected: banking
industry, healthcare industry, and education industry. These industries, in common, show a great level of
technological convergence as well as technological advances. Technology plays a key role to the
prosperity of those industries by enhancing the performance of products or services, diversifying the
delivery modes, and enlarging the communication channel. Especially, technological innovation in
banking (Morone and Berg, 1993), healthcare (Schoolerman, 1993), and education (Hill, 1999) has led the
prosperity of service industry. To investigate the convergence of each industry, the first step is to
download the patents for both service and manufacturing. To investigate the convergence dynamics, data
was collected for three-year period: 2000-2003. 2004-2006, and 2007-2009. Since the technological
convergence between service technology and manufacturing technology is a recent phenomenon, we
investigate the 10-year dynamics. Table 1 shows the number of service and manufacturing patents for
each industry.
101
Table 1: Number of patents for each industry
period
Banking
Healthcare
Service
Mfg.
Service
patents
patents
patents
2001-2003
42
348
47
Mfg.
patents
439
Education
Service
patents
14
Mfg.
patents
179
2004-2006
55
400
62
604
17
174
2007-2009
100
672
123
878
28
216
4. Results
Banking industry: To investigate the technological characteristics of those converging technologies, we
investigate the class information of manufacturing technology. Since the service technology is defined as
the patents categorized as 705 class, we investigate the class information of manufacturing technology
only. Since those manufacturing technologies have contributed to develop the service technology in each
convergence industry, we call it converging technologies. Table 2, 3, and 4 describes the result of top 10
classes for manufacturing technologies for each period.
Table 2: Top 10 classes for manufacturing technology for banking: 2001-2003
Class
Class description
235/379
Banking systems
235/380
Credit or identification card systems
709/202
Processing agent
382/140
Reading micro data including an optical imager or reader
713/176
Authentication by digital signature representation or digital watermark
235/381
Systems controlled by data bearing records with vending
435/005
Measuring or testing process involving enzymes or micro-organisms;
composition or test strip therefore; processes of forming such composition or
test strip involving virus or bacteriophage
209/534
Sorting paper money
709/218
Remote data accessing using interconnected networks
380/030
Particular algorithmic function encoding : public key
Table 3: Top 10 classes for manufacturing technology for banking: 2004-2006
Class
Class description
235/379
Banking systems
count
50
16
5
5
5
4
3
3
3
3
Count
68
235/380
Credit or identification card systems
12
209/534
Sorting paper money
12
235/381
Systems controlled by data bearing records
380/030
Particular algorithmic function encoding : public key
7
194/206
Control mechanism actuated by check, other than coin (e.g., slug, token, card,
etc.), which is mutilated or retained by pliant currency
Display peripheral interface input device : touch panel
6
Multiple computer communication using cryptography: chain or hierarchical
certificates
Banking: checks
3
Computer-to-computer session/connection establishing: network resources
access controlling
3
345/173
713/157
283/058
709/229
102
with vending
8
3
3
Table 4: Top 10 classes for manufacturing technology for banking: 2007-2009
Class
Class description
235/379
Banking systems
235/380
Credit or identification card systems
count
117
21
209/534
Sorting paper money
10
235/381
235/487
Systems controlled by data bearing records with vending
Records
6
5
380/280
Key management control vector or tag
4
235/383
Systems controlled by data bearing records: mechanized store
4
380/277
Key management
4
382/100
Applications
4
382/115
Applications: personnel identification (e.g., biometrics)
4
709/219
Remote data accessing: accessing a remote server
4
Since the target industry is a banking industry, technologies such as banking system technologies show
great dominance. For all period, the most cited classes are the same: class of 235/379 (banking system)
and 235/380 (credit or identification card system) are the dominant manufacturing technology to trigger
the technological convergence between products and services in the banking industry. However, the
dynamic differences between periods are also easily identified. Reading, processing, and bearing
technologies are importantly considered at the early 2000 whereas the management and application
technologies are highly cited in the late 2000. For example, classes such as 380/280, 235/383, 380/277,
382/100, and 382/115 are recently related to the service technology, emphasizing the management and
application of those service technologies.
Healthcare industry: Table 5, 6, and 7 shows the top 10 classes for manufacturing technology for
healthcare industry. Similar to the banking industry, the dominant class for technological convergence is
same for all period: 600/300 (Diagnostic testing). However, details are quite different for each period. In
the first period of 2000-2003, basic technologies for healthcare system play a key role in the technological
convergence. Therefore, measurement system, detailed technologies for diagnostic testing, and data
recording system are identified as the key converging technologies. However, in the period of 2004-2006,
technologies for specific purposes are found, such as communication for handicapped, sensor controls,
and printed matter methods (such as fingerprint) are considered as an important class for technological
convergence. Finally, in the period of 2007-2009, more advanced technologies are identified. In this
period, technologies related to the application and commercialization of the healthcare industry are
commonly identified, such as remote data assessing, emergence communication, electric computers and
digital processing system, credit card system, and personal identification system. Based on these
technologies, we can assume that the basic development of the healthcare industry are finalized, thus
technologies related to the actual commercialization are developed in this period.
Table 5: Top 10 classes for manufacturing technology for healthcare: 2001-2003
Class
Class description
600/300
Diagnostic testing
433/024
Method of positioning or aligning teeth
600/301
Diagnostic testing via monitoring a plurality of physiological data, e.g., pulse and
blood pressure
702/177
Measurement system: due time monitoring (e.g., medication clock, maintenance
interval)
368/010
Time measuring systems or devices combined with disparate device
119/051.02 Feeding device: having electronic identification and feed control
706/045
knowledge processing system
600/483
Diagnostic testing: simultaneously detecting cardiovascular condition and diverse
body condition
434/236
Psychology
600/513
Diagnostic testing: detecting heartbeat electric signal and diverse cardiovascular
characteristic
235/375
Systems controlled by data bearing records
103
count
39
9
8
5
5
4
4
4
3
3
3
Table 6: Top 10 classes for manufacturing technology for healthcare: 2004-2006
Class
Class description
600/300
Diagnostic testing
600/301
Diagnostic testing via monitoring a plurality of physiological data, e.g., pulse and
blood pressure
433/024
Method of positioning or aligning teeth
235/375
Systems controlled by data bearing records
434/112
Communication aids for the handicapped
604/067
Means for introducing or removing material from body for therapeutic
purposes: sensor controls pump, motor, or pressure driven means
604/066
Means for introducing or removing material from body for therapeutic
purposes: sensor responsive to body condition
283/067
Printed matter: method
600/483
Diagnostic testing: simultaneously detecting cardiovascular condition and
diverse body condition
434/262
Anatomy, physiology, therapeutic treatment, or surgery relating to human being
235/380
Credit or identification card systems
709/202
Distributed data processing: processing agent
Table 7: Top 10 classes for manufacturing technology for healthcare: 2007-2009
Class
Class description
600/300
Diagnostic testing
600/301
Diagnostic testing via monitoring a plurality of physiological data, e.g., pulse and
blood pressure
235/375
Systems controlled by data bearing records
709/217
Remote data accessing
379/045
Emergency or alarm communications: central office responsive to emergency
call or alarm (e.g., "911", operator position display)
221/002
Processes with recorder, register, indicator, signal or exhibitor
709/200
Electrical computers and digital processing systems: multicomputer data
transferring: miscellaneous
235/380
Credit or identification card systems
704/009
Linguistics: natural language
382/115
Personnel identification (e.g., biometrics)
709/203
Distributed data processing: client/server
706/045
Knowledge processing system
709/229
Network resources access controlling
600/523
Diagnostic testing: signal display or recording
count
48
12
10
7
6
6
4
4
4
3
3
3
count
66
12
11
7
6
6
5
5
5
4
4
4
4
4
Education industry: Finally, table 8, 9, and 10 shows the top 10 classes for manufacturing technology for
education industry. Similar to the previous cases, the dominant class for technological convergence is
almost same for all period: 434/350 (Response of plural examinees communicated to monitor or
recorder by electrical signals), except the final period of 2007-2009. At the early period (2001-2003),
basic technologies such as data processing, computer logic, and related means for data processing are
considered as important manufacturing technologies for the education industry. In the middle period
(2004-2006), technologies related to the advanced features are developed, such as computer graphics
processing and operator interface for plural users or sites (e.g., network). Basic technologies for
education are already developed for the first two periods (2001-2003 and 2004-2006), thus the
application and advanced technologies are developed in the final period (2007-2009). For example,
classes such as computer network monitoring and management, remote data accessing, and network
resources controlling emerge as important classes for technological convergence. Especially, technologies
with network show a great improvement, which reflects the practical circumstance of education industry.
With the rise of mobile device, application of network management or remote control is considered as a
key factor for education.
104
Table 8: Top 10 classes for manufacturing technology for education: 2001-2003
Class
Class description
434/350
Response of plural examinees communicated to monitor or recorder by
electrical signals
600/300
Diagnostic testing
434/323
Cathode ray screen display included in examining means
434/322
Question or problem eliciting response
463/017
Including means for processing electronic data: lot match or lot combination
(e.g., roulette, lottery, etc.)
434/236
Psychology
434/258
Physical education: developing or testing coordination
434/118
Computer logic, operation, or programming instruction
434/362
Electrical means for recording examinee's response
235/380
Credit or identification card systems
Table 9: Top 10 classes for manufacturing technology for education: 2004-2006
Class
Class description
434/350
Response of plural examinees communicated to monitor or recorder by
electrical signals
434/322
Question or problem eliciting response
600/300
Diagnostic testing
709/217
Remote data accessing
434/262
Anatomy, physiology, therapeutic treatment, or surgery relating to human being
706/045
Knowledge processing system
514/725
Vitamin a compound or derivative
706/059
Knowledge processing system: creation or modification
345/440
Computer graphics processing: graph generating
434/118
Computer logic, operation, or programming instruction
715/733
Operator interface: for plural users or sites (e.g., network)
434/353
Grading of response form
706/023
Neural network: control
434/362
Electrical means for recording examinee's response
709/218
Remote data accessing using interconnected networks
273/243
Chance device controls amount or direction of movement of piece
715/205
Presentation processing of document: hypermedia
Table 10: Top 10 classes for manufacturing technology for education: 2007-2009
Class
Class description
434/322
Question or problem eliciting response
709/224
Computer network monitoring
709/223
Computer network managing
600/300
Diagnostic testing
709/217
Remote data accessing
434/350
Response of plural examinees communicated to monitor or recorder by
electrical signals
709/229
Network resources access controlling
709/218
Remote data accessing using interconnected networks
434/107
Business or economics
715/735
Operator interface: configuration
700/291
Energy consumption or demand prediction or estimation
715/736
Network managing or monitoring status
455/446
Radiotelephone system: including cell planning or layout
703/011
Simulating nonelectrical device or system: biological or biochemical
434/236
Psychology
105
count
10
6
5
4
3
3
3
3
3
3
count
10
7
6
3
3
3
3
2
2
2
2
2
2
2
2
2
2
count
6
4
3
3
3
3
3
2
2
2
2
2
2
2
2
5. Conclusion
This study aims to investigate the technological convergence between manufacturing technology and
service technology using patent classification analysis. For this purpose, we first define the service
technology and corresponding manufacturing technology. Then, we employ patent classification analysis
to investigate the technological convergence between manufacturing and service technologies. This paper
contributes to the fields in twofold. First, the process of defining service technology and corresponding
manufacturing technology is suggested using citation analysis. This can provide a fruitful chance for
further research to investigate the relationship between manufacturing technologies and service
technologies. Second, we suggest a method to investigate the technological convergence using
classification analysis. Based on the definition of manufacturing technology associated with the service
technology, we regard the class information as a proxy for investigating the technological convergence.
Despite the contribution, however, this paper is still subject to some limitations. First, the definition of
service technology requires further in-depth consideration. Even if BM patents are frequently applied to
the service sector, it might be hard to consider all BM patents as service patents. Second, currently, we
employ patent classification analysis as a means to investigate the technological convergence, since the
target patents are derived based on the consideration of technological convergence process. However,
more advanced techniques can be employed such as co-classification analysis.
Acknowledgement: This work was supported by the National Research Foundation of Korea Grant
funded by the Korean Government (NRF-2011-32A-B00050).
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